Not one family nationwide or globally (that would be a trick)—but one family for each of us. Typically the one right next door, with their white picket fence, their teeth a little too white, their smiles a little too bright, especially when they casually show off the new car, new big-screen television, new whatever.

They have about the same kinds of jobs as us. How are they affording all that? Are we and our diligent attention to personal-finance blogs and frugality tips “suffering” needlessly??

And I had in my head that there were two types of Joneses:

They are making more money than us. We need to get over it. Don’t copy them.

They are not making more money than us. They’re driving themselves into the ground with their lavish spending. Their retirement picture ahead consists of a hovel and cans of dog food. Don’t copy them.

But after reading a recent article titled, “Why You Just Can’t Seem to Save Enough”, I have a theory about another set of Joneses. These Joneses are an amalgamation of every perceived want or need that we have, manifested in every family we know. These Joneses turn out to be our mind playing tricks on us.

The article I mentioned discusses the thinking of University of Virginia business-school professor Ronald Wilcox, author of Whatever Happened to Thrift? His main point seems to be: We notice and remember when others make extravagant purchases—and we don’t pay attention to their other “reasonable” purchases or their overall spending habits.

Wilcox’s examples:

“There’s little reason to notice that most of your neighbors drive Accords. … When a single family on your block buys a Lexus, however, it suddenly feels as though everyone has one.”

“We tell people about it when we go out to eat at a nice restaurant. We don’t convey the same information when we eat mac and cheese at home.”

Does that sound right? I guess it does to me. Looking back on when I’ve noticed neighbors’ cars, there’s little doubt that I notice a new Bimmer in someone’s driveway—but I have to concentrate to think about what the rest of the cars on the block are.

And when our friends mention trying out the latest new restaurant, it does cross my mind that they seem to eat at the nicest places. But I can’t really remember how often they really tell us a story like that. Are they eating at these fancy, schmancy places as often as it feels to me? Hmm, now that I think about it, the last mention of a great restaurant experience I remember hearing was connected to a special occasion—a birthday on a night when they could actually get babysitting. (Double score!)

I also remember enviously eyeing our friends’ new immense-screen television. It sure seemed a whole lot bigger and nicer than our television. But now that I think about it, their house is a little smaller than ours, and I now recall other decisions they seem to make regularly to try to save money. On balance, their spending decisions don’t look so different than ours. When I stop and think about it, at least!

Wilcox has a name for my errant assessments:

[Y]ou likely have a skewed view of your friends’ standard of living… [And a] few folks you know (and most of those you see in the media) really are doing better than you are, and that distorts your view even more. Wilcox calls the end results “perceived consumption superdisparity.” It’ll leave you superbroke if you aren’t careful.

Perceived consumption superdisparity? Uh, right. Also called, “Keeping up with the Joneses.”

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6
comments:

RC@ThinkYourWayToWealth

Interesting, and probably true many times. I think that people probably do remember the "big " purchases their friends or neighbors make, and then infer that they may live that lifestyle when they may really be frugal in other areas.

I think Wilcox is on to something. It surely is true that certain elements jump to the center of our field of view while others get overlooked. Sporty little Mercedes-Benz models tend to go front and center for me. As all those Corollas the rest of the neighbors drive...unnoticeable.

It's also probably so that in our ignorance of how a neighbor, friend or acquaintance actually manages money, we tend to imagine they're doing better than we are. I have a friend who earns the same salary I do and who thinks I should be able to spend just as much as she can; but she doesn't take into account the fact that she has a partner who brings even more than she does, while I live alone and have to make what I earn cover all the same expenses she and her partner do.

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